IN PLAY WITH B&K

Welcome to the latest instalment of “In Play with B&K”, the regular update from the Bray & Krais sports law team.

In Part One of this two-part series on image rights, Alex Goodchild teamed up with Gonzalo Sanz of leading international law firm Urίa Menéndez to discuss the legal framework in England and Spain, how image rights are exploited, image rights companies and the basic position between clubs and players under playing contracts.

In Part Two, we explain the commonly contested aspects of an image right agreement, such as exclusivity, and offer an overview of the tax treatment of image rights.

Negotiating the image rights agreement

At the heart of negotiations with a club is the allocation of rights to exploit the player’s image in different contexts. That allocation determines both the club’s ability to monetise its association with the player and the player’s freedom to pursue personal endorsement opportunities.

Club context

As a matter of course, clubs will expect an exclusive licence to exploit the player’s image rights in a “Club Context” (i.e. the representation of the player in connection or combination with the club’s name, colours, kit, badge etc.). Clubs need this for their own promotional work and for sponsorship deals with commercial partners and will therefore usually secure these rights expressly in the player’s employment contract or a separate image rights agreement. An image rights agreement both clarifies the scope of the club’s rights and may grant the club broader commercial rights than it would otherwise enjoy under the standard Premier League contract or, in Spain, by virtue of the sporting relationship itself.

Personal context

On the other hand, the position on the use of the player’s image rights in the “Personal Context” (i.e. any appearance of the player outside the Club Context and the international context) varies.

Players generally want to retain as much control as possible over exploitation of their image rights in this context, giving them the freedom to agree separate personal endorsements. Kylian Mbappé’s negotiations with PSG and Real Madrid serve as a high-profile example: in 2022, PSG reportedly offered him 100% of his personal sponsorship income while Real Madrid sought a 50:50 split (although he ultimately retained a reported 80% of his image rights when he joined Real Madrid in 2024).

However, clubs increasingly seek a degree of control, and in some cases exclusivity, over image rights’ uses in the Personal Context too:

• Clubs (especially the largest ones) can source personal endorsement deals via their own network and may argue that it is the club’s platform, or the status of playing for a leading club, that creates the branding opportunities. Accordingly, they may want to benefit financially from these personal endorsements (e.g. via a royalty split or revenue share mechanism). In Spain, a prominent example is Real Madrid, which reportedly applies, as a general rule, a 50:50 split to revenue from new personal endorsement deals entered into after a player joins the club, while the player retains all revenue from pre-existing personal sponsorships. The arrangement is not invariable, however, and the precise split depends on the player’s bargaining power, as illustrated by Mbappe in 2024 and by Vinicius Jr, who reportedly secured a larger share than under his previous 50:50 arrangement as part of his recent contract renewal.

• Image rights agreements must account for the overlapping interests of the club’s commercial partners and the player’s personal sponsors. Clubs will therefore seek to prevent players from promoting competing brands and to control new personal endorsement deals, sometimes through a blanket consent requirement (if not by having exclusivity over the Personal Context exploitation), as conflicts may cause embarrassment and devalue the club’s sponsorship arrangements. A typical compromise is for the player to notify the club of new opportunities, with the club retaining approval rights where a proposed deal would conflict with or damage its relationship with a commercial partner, while the player’s existing personal endorsements are expressly carved out.  The player’s right to enter into boot or glove deals (“tools of the trade”) and to use those products at all times will always be carved out, regardless of whether the suppliers compete with the club’s own kit suppliers.

In addition, players should seek safeguards governing how the club and its partners may use their image in the Club Context, so that such use does not undermine their own Personal Context endorsement arrangements.

Taxation

In the UK, and if done with care, image rights income can be segregated from employment income and hived into an IRC and taxed under the corporation tax regime. In that regard, the taxpayer’s victory in the Sports Club case established that where the image rights agreement is a genuine commercial agreement with independent value, payments for image rights are not a smokescreen for employment income.

After over a decade of enquiries, HMRC and Premier League clubs agreed a compromise protocol, setting out “Club Cap” and “Player Cap” parameters.  Although HMRC did not renew that agreement after 2017, clubs have broadly adhered to these guidelines.  The 2025 Budget, however, set out the UK Government’s intention to “clarify the tax treatment of image rights to ensure that all image rights payments related to an employment are treated as taxable employment income” and therefore subject to income tax and NICs, with rules coming into effect from April 2027.  While players’ personal endorsement deals should be unaffected, arrangements for use of “Club Context” image rights in a club’s sponsorship programme may no longer work as they did previously.  There has, however, been little by way of detail or draft legislation, calling into question whether the reform will actually go ahead.  The upcoming Autumn Budget should give an indication as to the Government’s plans in this regard.

In the case of Spain, and as explained in Part One, Spanish tax law applies the “85/15 rule” to club-related payments for the use of image rights, generally allowing up to 15% of the combined salary and image rights package to be paid to an IRC without being attributed to the player. The threshold does not, however, operate as an automatic safe harbour. If it is exceeded, the special regime may attribute the full club-related image rights payment (rather than merely the excess above 15%) to the player for personal income tax purposes. In addition, and even where the threshold is met, the licence or other grant of exploitation rights between the player and the IRC must reflect commercial reality and, because they will ordinarily be related parties, be entered into on arm’s-length terms.

In any event, an image of genuine commercial value remains a prerequisite for any tax-efficient structure, meaning these arrangements are not always appropriate for younger players at the outset of their career.

Image rights are a complex area and the information given in this post is high-level guidance only.  If you require any assistance or further information, please get in touch with Bray & Krais or Urίa Menéndez as appropriate.